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Here’s What Hedge Funds Think About Highwoods Properties Inc (HIW)

Reymerlyn Martin

We can judge whether Highwoods Properties Inc (NYSE:HIW) is a good investment right now by following the lead of some of the best investors in the world and piggybacking their ideas. There's no better way to get these firms' immense resources and analytical capabilities working for us than to follow their lead into their best ideas. While not all of these picks will be winners, our research shows that these picks historically outperformed the market when we factor in known risk factors.

Highwoods Properties Inc (NYSE:HIW) investors should be aware of an increase in support from the world's most elite money managers of late. HIW was in 17 hedge funds' portfolios at the end of the fourth quarter of 2018. There were 14 hedge funds in our database with HIW positions at the end of the previous quarter. Our calculations also showed that HIW isn't among the 30 most popular stocks among hedge funds.

Hedge funds' reputation as shrewd investors has been tarnished in the last decade as their hedged returns couldn't keep up with the unhedged returns of the market indices. Our research has shown that hedge funds' large-cap stock picks indeed failed to beat the market between 1999 and 2016. However, we were able to identify in advance a select group of hedge fund holdings that outperformed the market by 32 percentage points since May 2014 through March 12, 2019 (see the details here). We were also able to identify in advance a select group of hedge fund holdings that'll significantly underperform the market. We have been tracking and sharing the list of these stocks since February 2017 and they lost 27.5% through March 12, 2019. That's why we believe hedge fund sentiment is an extremely useful indicator that investors should pay attention to.

Bruce Kovner, Caxton Associates LP

We're going to go over the fresh hedge fund action surrounding Highwoods Properties Inc (NYSE:HIW).

How are hedge funds trading Highwoods Properties Inc (NYSE:HIW)?

At Q4's end, a total of 17 of the hedge funds tracked by Insider Monkey held long positions in this stock, a change of 21% from one quarter earlier. On the other hand, there were a total of 16 hedge funds with a bullish position in HIW a year ago. With hedge funds' capital changing hands, there exists a select group of notable hedge fund managers who were adding to their holdings meaningfully (or already accumulated large positions).

HIW_apr2019

More specifically, Renaissance Technologies was the largest shareholder of Highwoods Properties Inc (NYSE:HIW), with a stake worth $87.8 million reported as of the end of September. Trailing Renaissance Technologies was Millennium Management, which amassed a stake valued at $39.4 million. Echo Street Capital Management, D E Shaw, and Citadel Investment Group were also very fond of the stock, giving the stock large weights in their portfolios.

As aggregate interest increased, key money managers were leading the bulls' herd. Arrowstreet Capital, managed by Peter Rathjens, Bruce Clarke and John Campbell, created the most valuable position in Highwoods Properties Inc (NYSE:HIW). Arrowstreet Capital had $2.5 million invested in the company at the end of the quarter. Alec Litowitz and Ross Laser's Magnetar Capital also initiated a $0.9 million position during the quarter. The following funds were also among the new HIW investors: Paul Tudor Jones's Tudor Investment Corp, Bruce Kovner's Caxton Associates LP, and Matthew Hulsizer's PEAK6 Capital Management.

Let's check out hedge fund activity in other stocks similar to Highwoods Properties Inc (NYSE:HIW). These stocks are Antero Midstream Corporation (NYSE:AM), Hawaiian Electric Industries, Inc. (NYSE:HE), Tribune Media Company (NYSE:TRCO), and Spirit Airlines Incorporated (NYSE:SAVE). This group of stocks' market caps resemble HIW's market cap.

[table] Ticker, No of HFs with positions, Total Value of HF Positions (x1000), Change in HF Position AM,7,18668,-4 HE,13,162017,2 TRCO,40,1421487,1 SAVE,30,518075,10 Average,22.5,530062,2.25 [/table]

View table here if you experience formatting issues.

As you can see these stocks had an average of 22.5 hedge funds with bullish positions and the average amount invested in these stocks was $530 million. That figure was $183 million in HIW's case. Tribune Media Company (NYSE:TRCO) is the most popular stock in this table. On the other hand Antero Midstream Corporation (NYSE:AM) is the least popular one with only 7 bullish hedge fund positions. Highwoods Properties Inc (NYSE:HIW) is not the least popular stock in this group but hedge fund interest is still below average. This is a slightly negative signal and we'd rather spend our time researching stocks that hedge funds are piling on. Our calculations showed that top 15 most popular stocks) among hedge funds returned 24.2% through April 22nd and outperformed the S&P 500 ETF (SPY) by more than 7 percentage points. Unfortunately HIW wasn't nearly as popular as these 15 stock (hedge fund sentiment was quite bearish); HIW investors were disappointed as the stock returned 15.3% and underperformed the market. If you are interested in investing in large cap stocks with huge upside potential, you should check out the top 15 most popular stocks) among hedge funds as 13 of these stocks already outperformed the market this year.

Disclosure: None. This article was originally published at Insider Monkey.

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